Question: The forecasting equation for the exchange rate between the Kenya shilling and the US dollar is Y t = a + b 1 X 1t

The forecasting equation for the exchange rate between the Kenya shilling and the US dollar is

Y_t= a + b₁X_1t+b₂X_2t

Where:

Y_tis the direct quote

X_1tis the inflation rate differential in percentage

X_2tis the growth rate in GNP differential between the two countries in percentage

Historical data has been collected and processed using a multiple regression computer package yielding the following results: a = 70, b₁= 3.5 and b₂= -2.2

The forecast inflation rate in the US is 5% while in Kenya is 10%. The GNP growth rate is 14% in the US and 6% in Kenya.

Required

The direct quote between the Kenya shilling and the US dollar is______

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